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Is there value in giving away your product or service? The topic came up at a recent event when a small business owner questioned whether or not she should continue to give away her company’s products at industry events. When the business first launched she provided free products to grow her customer base but, now isn’t certain the free offer is needed.

For those starting a new business, one of the biggest challenges is getting those first customers. Attracting customers by offering them a risk-free opportunity to try your product or service can be a successful strategy to build business. The offer may be free trial, special pricing or a 100% guarantee that can remove concern a customer may have about trying an unknown.

Free trials are a frequently used strategy. Cloud-based software companies use free trials to grow business and then convert trial users to paying customers. One of the most successful companies to employ this strategy is Salesforce.com. Another cloud-based software company that offers free products is WordPress.com. WordPress’ strategy is to provide basic blog features free with the intent to entice customers to pay for additional or enhanced features.

Free may not be a good strategy for some businesses. Costs, brand image, value perception and conversion to sales need to be considered. Answering these questions can help determine if there is value in providing a product or service free.

Will your business benefit by giving something away?

Is the goal is to entice your targets to use your product and convert to paying customers? Or are customer referrals and success stories what you’re after? Both are a tangible benefit. Decide up front what benefits/results you want to achieve.

Do your potential customers find value in what you are giving free?

The bottom line is if the product doesn’t solve a business problem for the customer, it won’t matter how great the offer is. A good example of providing something of value to customers are free assessments. Let’s look at a company that sells a product that improves CRM database performance. This company provides free professional assessments that evaluate productivity and performance of customers’ current CRM products. In addition, the assessment includes data showing how by also using their company’s product customers can improve productivity by X% and save $Y annually. The free assessment underscores how using the company’s product solves key business issues.

Will providing your product free help or hurt your brand?

Providing free products or services must support the brand. In other words, potential customers should not think less of your product or service because it is offered free. In the example above the free assessment supports the brand, the company is positioned as knowledge experts in improving CRM database performance and employee productivity.

Can your business afford it?

Giving away free product is another marketing activity so evaluate it as such. Set your goals and make sure to include the costs of giving away free product in your budget. Since the desired result is to attract repeat and long-term customers, offer the free incentive to the targets that will continue to do business with you.

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Is following intuition, a hunch, or a feeling a good business decision? Steve Jobs said when interviewed that he made decisions based on his gut. He didn’t believe in market research and he didn’t believe most people knew what they wanted. Copernicus Consulting & Research points out in the Marketing Frey Blog, that an argument could be made against the need for marketing research where technology is changing so rapidly or not yet invented that if asked, a customer won’t identify the need or desire for it. For most of us, our products or services aren’t as break-through as the personal computer or Apple’s iPad.

You may favor an intuitive decision-making style not a fact based style. But, the question you need to ask is how can you make the best decisions for your business to achieve the most optimal outcome whatever your decision-making style?

Don’t get me wrong. I do believe in intuition. It springs from our knowledge, skills, and expertise. Intuition may be the start of a great new product, improvement or customer service program. But unless you are the next Steve Jobs, you need to do more than run with your gut. Take it to the next level.

I advocate using research and facts to support your intuition. A lot of information is available that doesn’t cost anything except for the time it takes to do some digging to find it. Look online for free information on markets, competitors, trends, and customers. Use your intuition and follow it up with facts to achieve the greatest results.

Do you make decisions in your business based on your instincts? Do you use research to back them up?

As we near the end of 2011, now is the time to pull that business plan off the shelf. If you haven’t done this already, it’s time for a full review of your plan for the coming year.

Why is it important to review your business plan? To achieve your goals and move beyond where you are today, you must assess how well your company is performing to the business plan and identify any significant changes that may require adjustments to the plan. If you make it a best practice to do a full review at least once a year, your business goals will remain top of mind and you will be positioned to take full advantage of opportunities, address challenges and grow your business.

Make sure you review these key components of your business plan before 2012

1. Company Analysis: How well did your business perform to plan this year? Did your business meet expectations? Did you accomplish what you set out to do? If you didn’t make your targets, do you know why not? What are you good at and what makes you unique and qualified to be in this business? Identify your biggest challenges and opportunities.

2. Industry Analysis: Has the size of the market grown or contracted? Take a look at the competition. Are there more or fewer players? Who are the major players? What position do they have? Do you see new market trends?

3. Customer Analysis: Who are your customers and are they the same targets in your business plan today? Are they buying your products and services? What are their needs and are any trends affecting their buying behavior?

4. Marketing Strategy: Is your marketing strategy generating the projected revenues and results from your products/services. Are your products priced and positioned to take advantage of opportunities. Do your products’ features and or specifications meet the market needs? Did your marketing plans and promotional activities generate the intended results?

5. Financial Plan: Do you have enough revenues and the necessary cash flow to operate the business? Do you need more capital to run the business and take advantage of market opportunities?

6. Management Team: Do you have the right players to operate and grow your business?

With a full business plan review completed, you are ready to make any necessary changes and to set your goals for 2012 and develop an action plan to achieve them. It can be difficult especially for small businesses to take the time out from day-to-day business operations to review and plan. Planning takes discipline but, for long-term success it’s a requirement.

It’s been six months or longer since you last looked at your business plan. Now might be a good time to consider a review. Here are a few of the reasons why you might want to take a look at your business plan.

Something significant has changed in the marketplace, such as competition or government legislation that may affect your strategy and achieving your plan.

Your company has made changes to or introduced new products.

You may want to change your business structure or need additional funding.

Costs of business operations have increased due to an increase in the price of a needed resource and your financial projections may no longer be valid. An example is the increase in the price of oil and subsequent increase in gas prices.

What is the right amount of time between reviews? Business is dynamic and consequently a business plan is dynamic. A good practice is to review the plan every six months and include anything that has specifically changed, such as products, customers or the competition. Businesses should complete a major review and update of their business plan yearly.

There is no denying that social media is the biggest thing to happen to marketing since the Internet. Businesses are trying to figure out how to effectively be a part of this game changing phenomenon. A friend and I were talking the other day about one of her clients who believed their company needed a presence on Facebook. When the client asked for her help, she recommended they focus their marketing activities in other areas.

Why? Facebook has over 800 million active users and plays an important role in many of the largest corporations’ marketing efforts. For my friend’s client, a B2B supplier in a specialized industry, Facebook isn’t the best fit to reach their target customers and to meet their business objectives. So, how do you know if social media is the right choice for your business?

Start with a marketing plan. A good marketing plan includes your business goals and objectives and which marketing activities can help you achieve them.

Here are a few basic elements that should be included in your marketing plan;

Your business goals and objectives.

Your target customers.

The marketing activities that support those goals and objectives with your target customers.

Your budget.

Determine if social media can further your business goals and objectives. Is social media an effective use of your budget and resources compared to other marketing tools? Answering these questions when developing your marketing plan will help you decide if social media is the right choice for your business.

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About the Blogger

Susan Lowe is a career marketer who specializes in creating and executing marketing strategies and plans for businesses helping them realize their business goals by bringing energy, expertise and marketing intelligence to every project and client engagement. She currently is an independent marketing consultant located in the San Francisco Bay Area.